In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Pillar to Post Home Inspectors franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Pillar to Post Home Inspectors franchise, based on Item 7 of the company’s 2021 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Pillar to Post Home Inspectors franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned Pillar to Post Home Inspectors outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD

• Section V – Presentation and analysis of Pillar to Post Home Inspectors’ financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• 2020, 2019, and 2018 average and median sales (and percentage change from prior year) for the 365, 354, and 365 Pillar to Post Home Inspectors franchises that were open during the entire calendar years 2020, 2019, and 2018, respectively

• 2020, 2019, and 2018 average and median sales by quartile (and percentage change from prior year) for the 365, 354, and 365 Pillar to Post Home Inspectors franchises that were open during the entire calendar years 2020, 2019, and 2018, respectively

• 2020, 2019, and 2018 average and median job size (and percentage change from prior year) for the 365, 354, and 365 Pillar to Post Home Inspectors franchises that were open during the entire calendar years 2020, 2019, and 2018, respectively

• number of Pillar to Post Home Inspectors franchises that achieved sales over $3,000,000, $2,000,000 to $2,999,999, $1,000,000 to $1,999,999, $750,000 to $999,999, $500,000 to $749,999, and $250,000 to $499,999 for the years ending December 31, 2020, December 31, 2019, and December 31, 2018, respectively

• average, median, highest, and lowest selling prices as a percentage of annual sales for Pillar to Post Home Inspectors franchises sold during the years ending December 31, 2020, December 31, 2019, and December 31, 2018, respectively

• percentage of total systemwide sales of Pillar to Post Home Inspectors franchises by calendar quarter for the years ending December 31, 2020, December 31, 2019, and December 31, 2018, respectively

Section I – Background Information

19 Things You Need to Know About the Pillar to Post Home Inspectors Franchise

How the Brand Thrived During the Height of the Pandemic

1.  In mid-January 2021, Pillar to Post Home Inspectors published a blog post discussing how the brand thrived during 2020 despite the challenges of the COVID-19 pandemic. Dan Steward, president and CEO of Pillar to Post Home Inspectors, said “A home inspection is a crucial step in each and every home ownership story.” In 2004, Steward took the helm of what is now considered the leading home inspection company in North America.

2.  The combination of cutting-edge technology, efficiency, and a stellar reputation among the real estate community, have all come together to put Pillar to Post Home Inspectors at the top of its industry. One of the reasons for this is the company culture. Steward is determined to offer the company’s nearly 600 franchisees spread over 49 states and nine Canadian provinces, quality of life and a secure future for them and their families.

3.  The franchise model at Pillar to Post Home Inspectors allows the franchisee to start small and grow the business at a measured pace to create a larger, equity-rich company that meets the growing concerns of homebuyers and owners. Moreover, Pillar to Post Home Inspectors, whose parent company FirstService Brands specializes in home service franchise brands, has been repeatedly recognized as No. 1 in the Home Inspection category by numerous publications and associations. The same or similar culture is found throughout the FirstService Brands sister companies.

4.  In a year that began with high expectations, few could have predicted a global pandemic that would bring much of the business world to its knees. According to Steward, “The year started brilliantly. We had a year of growth and innovation, and we were charged up for more of the same. We not only added over 50 new franchisees in 2019 but our painstaking and innovative project, the PTP360 tour had finally come to fruition.”

5.  It all came to a slowdown in the third week of March, when COVID-19 slammed into American shores and shut down all but the most essential businesses. Real estate sales dropped 8.5 percent in the first month and were widely expected to decline by up to 40 percent over the course of spring and summer.

6.  American consumers, upon realizing that the pandemic was going to mean a likely long stint of working from home, looked for the homes of their dreams while taking advantage of historic low interest rates. Pillar to Post Home Inspectors had to pivot immediately to set up all new protocols that guaranteed the safety of its inspection teams and customers. Steward said, “Like real estate, we are a people business. Keeping people safe was our first priority, so first in our playbook was devising foolproof safety protocols.”

7.  As the need for home inspections soared, Steward and a taskforce made up of franchisees, real estate professionals, and customers devised new safety procedures for keeping people safe and instilling confidence in the home inspection process. He added, “The bottom line is that health crisis or not, buyers need to know the condition of the home they are buying.”

8.  While Pillar to Post home inspections typically include the presence of the agent, and often the buyer, with traditional procedures upended by the pandemic, it seemed easiest to restrict access to the inspector. But franchisees quickly pivoted to Zoom technology to keep customers involved. Steward added, “The human factor is critical. People want to see how the toilet flushes and how much water pressure there is in the shower.”

9.  So, using 360-degree digital technology and strict safety protocols – gloves and shoe coverings, wiping down doorknobs, and any other surfaces touched – Pillar to Post Home Inspectors began providing customers with a real-time, personal inspection experience. Digital copies of the inspector’s report are provided after the inspection so that the agent can effectively negotiate with the seller about any needed repairs.

10.  According to Steward, this touchless sharing of information enables buyer confidence even for those who are buying property far from home. In an industry where reputation is everything. Pillar to Post chooses its franchisees with infinite care. Steward said, “Our franchisees are the best trained in the industry. They come to us from a variety of backgrounds, but they are people who love all things real estate, and who had the desire to own their own business. Some 25 percent of our franchisees are military veterans, and I’m happy to say we have an increasing number of women and couples joining our ranks.”

11.  They are people like Paula Camarena in Huntington Beach, Calif., a 20-year sales manager for technology products who knew, even as she was completing her MBA, that she wanted to be her own boss. A real estate investor with a love of houses, she researched multiple business possibilities. When a real estate agent friend suggested the home inspection business, she began a conversation with Pillar to Post Home Inspectors, and quickly became convinced this was the right business for her.

12.  Camarena said, “When I launched my Pillar to Post franchise in 2018, I challenged myself to be successful, and I am so happy I made the move. I feel blessed to be able to help my clients in one of the biggest purchases in their lives, and grateful for the training and company support that has helped to make me so successful.”

Recognized in Entrepreneur’s Franchise 500

13.  In January 2021, Pillar to Post Home Inspectors announced that it had ranked on Entrepreneur magazine’s Franchise 500. Dan Steward, president and CEO of Pillar to Post Home Inspectors, said, “We are honored to appear on this prestigious list for 24 years in a row. Nine of those as No. 1 in Category for our industry. We also feel good about getting through one of the most challenging years in the history of small business by finding innovative technologies to overcome this obstacle and keep performing home inspections. Our new virtual tool PTP360 Tours helped us keep up with the demand for home inspections as real estate sales actually increased. Our existing franchisees did an extraordinary job taking care of our customers and we also added 40 new franchisees despite all the hurdles.”

14.  Jason Feifer, editor-in-chief of Entrepreneur magazine, said, “2020 was a challenging year for everyone, but it was also a year of unusual opportunity. Franchises were able to be nimble and innovative, serving the needs of franchisees and customers in ways that will resonate for many years to come. We believe that, when we eventually look back on this time, we’ll see it as a moment when many brands defined themselves for the future.”

15.  In Entrepreneur’s continuing effort to best understand and evaluate the ever-changing franchise marketplace, the company’s 42-year-old ranking formula continues to evolve as well. The key factors that go into the evaluation include costs and fees, size and growth, support, brand strength, and financial strength and stability. Each franchise is given a cumulative score based on an analysis of more than 150 data points, and the 500 franchises with the highest cumulative scores become the Franchise 500 in ranking order.

Company History

16.  Pillar to Post Home Inspectors was founded in 1993 by Mike Brewer, an entrepreneur with experience in the automotive glass replacement franchise industry. Around that time, Brewer had just bought a new house, but felt that the home inspection was inadequate and did not meet his needs. Brewer began researching the home inspection industry and found that it lacked any deliberate technical training, business training, or standards by which an inspection was conducted.

17.  After what he found, Brewer decided he wanted to change the industry. He started Pillar to Post Home Inspectors with a formal technical training program, a detailed standard of practice for conducting the inspection, a business start-up and operations program, and a formatted inspection report to make sure every report was delivered to a consistently high standard for the inspector to provide to the realtor and home buyer.

18.  Due to the demand for his services, Brewer began franchising Pillar to Post in 1994. By 2000, Pillar to Post had become the largest home inspection company in North America. A few years later, in 2003, Brewer sold Pillar to Post to FirstService Brands and left the business. Today, there are Pillar to Post Home Inspectors locations all around North America.

Entrepreneur’s Franchise 500

19.  Pillar to Post Home Inspectors ranked No. 246 on Entrepreneur’s 2021 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Pillar to Post Home Inspectors franchise costs, based on Item 7 of the company’s 2021 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Pillar to Post Home Inspectors’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2018

• Outlets at the Start of the Year:  483
• Outlets at the End of the Year:  490
• Net Change:  +7

2019

• Outlets at the Start of the Year:  490
• Outlets at the End of the Year:  494
• Net Change:  +4

2020

• Outlets at the Start of the Year:  494
• Outlets at the End of the Year:  481
• Net Change:  -13

Company-Owned

2018

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2019

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2020

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis

• The following statements consist of the averages and medians of the reported annual sales of the 365, 354, and 365 franchisee-owned units that were open during the entire calendar years 2020, 2019, and 2018, respectively.

• These statements exclude the results from 125, 140, and 121 franchisee-owned units that were either not open during the entire calendar years 2020, 2019, and 2018, respectively, or did not report gross sales for each period of those calendar years.

• “Sales” includes all revenues reported by franchisees to Pillar to Post, including all revenue received from the sale of all services and products in the operation of the franchise. It does not include sales taxes or other taxes collected by you from customers of your franchised business for transmittal to the appropriate taxing authority.

• “Selling Prices” are the gross purchase prices paid for the franchises sold during the subject time period.

• The gross sales of franchisee-owned units were derived from unaudited financial reports submitted by franchisees for the purpose of computing royalties.

• The financial performance representation does not reflect the costs of sales, operating expenses, or other costs or expenses that must be deducted from the gross revenue figures to obtain your net income or profit.

• You should conduct an independent investigation of the costs and expenses you will incur in operating your franchised business. Franchisees or former franchisees listed in the disclosure document may be one source of this information.

• Some franchises have earned these amounts. Your individual results may differ. There is no assurance that you will earn as much.

Part 1 – Statement of Average and Median Sales of Pillar to Post Franchises for Years Ending December 31, 2018, December 31, 2019, and December 31, 2020

2020

• Number of Franchisee-Owned Units:  365
• Average Sales Per Unit:  $256,988
• Percentage Change From Prior Year:  13%
• Median Sales Per Unit:  $149,132
• Percentage Change From Prior Year:  4%

2019

• Number of Franchisee-Owned Units:  354
• Average Sales Per Unit:  $227,461
• Percentage Change From Prior Year:  5%
• Median Sales Per Unit:  $142,739
• Percentage Change From Prior Year:  1%

2018

• Number of Franchisee-Owned Units:  365
• Average Sales Per Unit:  $216,057
• Percentage Change From Prior Year:  -7%
• Median Sales Per Unit:  $140,829
• Percentage Change From Prior Year:  -12%

Part 2 – Statement of Average and Median Sales Per Quartile of Pillar to Post Franchises for Years Ending December 31, 2018, December 31, 2019, and December 31, 2020

First Quartile

• Average Sales Per Unit 2018:  $515,006
• Average Sales Per Unit 2019:  $556,930
• Average Sales Per Unit 2020:  $632,129
• Average Sales Per Unit 2019/2020 % Growth:  14%

• Median Sales Per Unit 2018:  $398,455
• Median Sales Per Unit 2019:  $424,623
• Median Sales Per Unit 2020:  $470,266
• Median Sales Per Unit 2019/2020 % Growth:  11%

Second Quartile

• Average Sales Per Unit 2018:  $186,727
• Average Sales Per Unit 2019:  $189,869
• Average Sales Per Unit 2020:  $208,811
• Average Sales Per Unit 2019/2020 % Growth:  10%

• Median Sales Per Unit 2018:  $177,156
• Median Sales Per Unit 2019:  $181,512
• Median Sales Per Unit 2020:  $209,412
• Median Sales Per Unit 2019/2020 % Growth:  15%

Third Quartile

• Average Sales Per Unit 2018:  $110,027
• Average Sales Per Unit 2019:  $112,853
• Average Sales Per Unit 2020:  $123,890
• Average Sales Per Unit 2019/2020 % Growth:  10%

• Median Sales Per Unit 2018:  $107,469
• Median Sales Per Unit 2019:  $112,418
• Median Sales Per Unit 2020:  $124,818
• Median Sales Per Unit 2019/2020 % Growth:  11%

Fourth Quartile

• Average Sales Per Unit 2018:  $54,245
• Average Sales Per Unit 2019:  $51,922
• Average Sales Per Unit 2020:  $58,998
• Average Sales Per Unit 2019/2020 % Growth:  14%

• Median Sales Per Unit 2018:  $55,347
• Median Sales Per Unit 2019:  $51,385
• Median Sales Per Unit 2020:  $59,098
• Median Sales Per Unit 2019/2020 % Growth:  15%

Part 3 – Statement of Average and Median Job Size of Pillar to Post Franchises for Years Ending December 31, 2018, December 31, 2019, and December 31, 2020

2020

• Number of Franchisee-Owned Units:  365
• Average Job Size:  $595
• Percentage Change From Prior Year:  6%
• Median Job Size:  $529
• Percentage Change From Prior Year:  5%

2019

• Number of Franchisee-Owned Units:  354
• Average Job Size:  $564
• Percentage Change From Prior Year:  4%
• Median Job Size:  $504
• Percentage Change From Prior Year:  2%

2018

• Number of Franchisee-Owned Units:  365
• Average Job Size:  $543
• Percentage Change From Prior Year:  3%
• Median Job Size:  $493
• Percentage Change From Prior Year:  1%

Part 4 – Statement of Number of Pillar to Post Franchises Over Certain Annual Sales Thresholds for Years Ending December 31, 2018, December 31, 2019, and December 31, 2020

2020

• Over $3,000,000:  1
• $2,000,000 to $2,999,999:  1
• $1,000,000 to $1,999,999:  10
• $750,000 to $999,999:  10
• $500,000 to $749,999:  18
• $250,000 to $499,999:  72
• Total:  112

2019

• Over $3,000,000:  0
• $2,000,000 to $2,999,999:  2
• $1,000,000 to $1,999,999:  6
• $750,000 to $999,999:  12
• $500,000 to $749,999:  13
• $250,000 to $499,999:  65
• Total:  98

2018

• Over $3,000,000:  0
• $2,000,000 to $2,999,999:  1
• $1,000,000 to $1,999,999:  6
• $750,000 to $999,999:  8
• $500,000 to $749,999:  16
• $250,000 to $499,999:  62
• Total:  93

Part 5 – Statement of Average and Median Selling Prices as a Percentage of Annual Sales for Pillar to Post Franchises Sold During Years Ending December 31, 2018, December 31, 2019, and December 31, 2020

2020

• Number of Pillar to Post Franchises Sold:  11
• Average Selling Price as a Percentage of Prior Year’s Annual Sales:  77%
• Median Selling Price as a Percentage of Prior Year’s Annual Sales:  61%
• Highest Selling Price as a Percentage of Prior Year’s Annual Sales:  152%
• Lowest Selling Price as a Percentage of Prior Year’s Annual Sales:  3%
• Number of Transactions Above Average Selling Price as a Percentage of Prior Year’s Annual Sales:  3
• Number of Transactions Above Median Selling Price as a Percentage of Prior Year’s Annual Sales:  6

2019

• Number of Pillar to Post Franchises Sold:  14
• Average Selling Price as a Percentage of Prior Year’s Annual Sales:  65%
• Median Selling Price as a Percentage of Prior Year’s Annual Sales:  65%
• Highest Selling Price as a Percentage of Prior Year’s Annual Sales:  126%
• Lowest Selling Price as a Percentage of Prior Year’s Annual Sales:  35%
• Number of Transactions Above Average Selling Price as a Percentage of Prior Year’s Annual Sales:  4
• Number of Transactions Above Median Selling Price as a Percentage of Prior Year’s Annual Sales:  4

2018

• Number of Pillar to Post Franchises Sold:  6
• Average Selling Price as a Percentage of Prior Year’s Annual Sales:  52%
• Median Selling Price as a Percentage of Prior Year’s Annual Sales:  73%
• Highest Selling Price as a Percentage of Prior Year’s Annual Sales:  77%
• Lowest Selling Price as a Percentage of Prior Year’s Annual Sales:  14%
• Number of Transactions Above Average Selling Price as a Percentage of Prior Year’s Annual Sales:  3
• Number of Transactions Above Median Selling Price as a Percentage of Prior Year’s Annual Sales:  2

Part 6 – Statement of Percentage of Total Systemwide Sales of Pillar to Post Franchises by Calendar Quarter for Years Ending December 31, 2018, December 31, 2019, and December 31, 2020

2020

• First Quarter:  20%
• Second Quarter:  24%
• Third Quarter:  32%
• Fourth Quarter:  24%

2019

• First Quarter:  21%
• Second Quarter:  31%
• Third Quarter:  27%
• Fourth Quarter:  20%

2018

• First Quarter:  22%
• Second Quarter:  32%
• Third Quarter:  27%
• Fourth Quarter:  19%

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